Pending Home Sales Fall the Most Since May 2010

Pending home sales have fallen the most since May 2010. The National Association of Realtors (NAR) is spinning this as potential buyers are being thwarted by a shortage of affordable homes because sales are so good.

Lawrence Yun, NAR chief economist, writes…

With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity.

Foreigners have bought billions of dollars worth of houses which has created a situation where there are not enough homes for domestic US citizens to purchase. As a result, prices are rising, and homes are once again unaffordable for most hardworking Americans.

[graphiq id=”bfXwkIACsh7″ title=”Median Home Sale Price in The United States” width=”460″ height=”602″ url=”https://w.graphiq.com/w/bfXwkIACsh7″ link=”http://trends.findthehome.com/l/2828/The-United-States” link_text=”Median Home Sale Price in The United States | FindTheHome” ]

This Reminds Me of 2009 – 2010

We have to go all the way back to 2009 and 2010 to find a similar plunge in pending home sales.

Interestingly, here are the reports the NAR was publishing just before the entire housing market crashed and the Great Recession hit.

“Existing home sales at highest level since 2007… Similarly, robust sales may be occurring in November.”

“U.S. pending home sales surge… Pending sales of previously owned U.S. homes shot up by 6.7 percent in April, the biggest monthly gain in 7 1/2 years.”

The NAR is a cheerleader for the real estate market. The NAR is made up of salespeople, brokers, property managers, appraisers, and others who make money in the real estate industry. The NAR will never publish a forecast report that would scare potential property buyers because it would be contrary to their financial interests to do so. Knowing this, traders have to be careful looking to the NAR to guide their investing decisions.

PrivateBancorp Takeover Big +24% Win

February 28, 2016: PrivateBancorp to be promoted to S&P400 index after the close of trading on February 29, 2016. S&P SmallCap 600 constituent PrivateBancorp Inc. (PVTB) will replace Sirona Dental Systems Inc. (SIRO) in the S&P MidCap 400 after the close of trading on Monday, February 29, 2016.

June 29, 2016: We had a huge 24.25% win in PrivateBancorp. Not bad for a 4 month hold. Congratulations if you made money on this trade. Details of what caused the stock to do a gap up open today are below.

PrivateBancorp, Inc. To be acquired by CIBC for ~$47/shr in cash and stock deal valued at $3.8B
CIBC announced that it has entered into a definitive agreement to acquire PrivateBancorp, Inc. and its subsidiary, The PrivateBank, a high-quality Chicago-based middle market commercial bank with US$17.7 billion in assets, complemented by private banking and wealth management capabilities.

The transaction will significantly expand CIBC’s reach in North America, and enable PrivateBancorp to continue building on its record of growth and client service under the leadership of its current management team. The acquisition will create a platform for CIBC to deliver U.S. banking services to its existing Canadian personal and business banking clients, accept deposits in the U.S., and provide commercial and private banking services to the clients of Atlantic Trust, following receipt of required approvals. Atlantic Trust, a leading U.S. private wealth management firm serving high net worth families, private foundations and endowments, was acquired by CIBC in fiscal 2014. For PrivateBancorp, the transaction will bring added financial strength, the benefits of a larger banking enterprise and deeper wealth management expertise to its clients across the U.S.

CIBC will pay US$18.80 in cash and 0.3657 of a CIBC common share for each share of PrivateBancorp common stock. Based on the June 28, 2016 closing price of CIBC’s common shares on the New York Stock Exchange (US$77.11), the total transaction value is approximately US$3.8 billion (C$4.9 billion) or US$47.00 of value per share of PrivateBancorp common stock at announcement.

PrivateBancorp is a high-quality, client-focused, middle market commercial, private banking, and wealth management organization with community banking capabilities. PrivateBancorp has approximately 1,200 employees, a leading presence in its hometown of Chicago, and a presence in 11 additional attractive U.S. markets. PrivateBancorp’s clients include middle market companies, as well as business owners, executives, entrepreneurs and families. PrivateBancorp also delivers specialty banking services to clients in specific industry segments, including healthcare and technology.

Additional Transaction Details

The total value of the consideration that PrivateBancorp common stockholders will receive upon the closing of the transaction will be based in part on the value of CIBC common shares at closing. CIBC will satisfy aggregate consideration payable to PrivateBancorp stockholders by paying approximately US$1.5 billion in cash and issuing approximately 29.5 million CIBC common shares, representing an approximately 60 per cent stock and 40 per cent cash mix.

CIBC anticipates completing the transaction during the first calendar quarter of 2017, subject to satisfaction of customary closing conditions, including approval by PrivateBancorp’s shareholders and receipt of regulatory approvals.

CIBC expects to maintain a Common Equity Tier (CET) 1 ratio at closing of at least 10 per cent. CIBC’s CET 1 ratio was 10.4 per cent as at April 30, 2016 and since has been further strengthened by the receipt of net proceeds of the sale of our interest in American Century Investments.

The transaction is expected to be accretive to CIBC’s adjusted earnings per share in year 3.

February 28, 2016: PrivateBancorp to be promoted to S&P400 index after the close of trading on February 29, 2016. S&P SmallCap 600 constituent PrivateBancorp Inc. (PVTB) will replace Sirona Dental Systems Inc. (SIRO) in the S&P MidCap 400 after the close of trading on Monday, February 29, 2016.

PrivateBancorp Inc (PVTB Updated Trend Analysis) provides customized financial services to middle market companies, business owners, executives, entrepreneurs, and families in the United States. It offers commercial and personal banking products and services, including checking, savings, and money market accounts; corporate deposits; interest-bearing and non-interest bearing demand deposits; and certificates of deposits.

The Big Oil Short

The EIA Weekly Crude Stocks report showed crude oil inventories fell -0.9 million barrels in the June 17 week to 530.6 million, the fifth weekly decline in a row.

Falling crude stocks are bullish for oil; however, if you chart the weekly crude stocks report, you will see a pattern emerge.

Crude stocks cycle back and forth between drawdown and surplus. Notice how weekly crude stocks correlate with the price of oil:

I used two different charting tools for the charts above and used color coded lines to show the correlated sections between the two charts. Notice that when the weekly crude stocks report shows a rise in inventories of oil, oil falls. Conversely, oil rises when the inventories go negative as the result of a drawdown. It’s a straight up supply and demand correlation.

The EIA Weekly Crude Stocks chart shows tradeable cycles back and forth. Inventories have drawn down in oil for the last three months which has resulted in a run up of +85% in the price of oil. The EIA weekly crude stocks chart looks ready for the supply of oil to rise again.

Crude Oil Options Traders “Most Bearish” Since At Least 2010

Zerohedge writes

The skew between bearish puts and bullish calls has not been this negatively positioned since at least 2010 (when Bloomberg data began).

Notice that the options skew was right in predicting the run up in oil back in January. Is it also right in predicting a swing down in oil? My money is on yes, and the short side of oil. I took a short position against the price of oil today.

Jaw Dropping Chart Shows Severe Economic Contraction In 2016

This chart might be one of the scariest you will see this week. It gives a bleak picture of what is going on inside corporate America.

The number of companies increasing dividends per share has dropped by the most since right before the Great Recession.

Andrew Birstingl, Research Analyst for FactSet.com writes

But while DPS for the index has continued to rise, it has been doing so at a decreasing rate. Q1 was the second consecutive quarter that DPS has increased at a single-digit growth rate. This marked a divergence from the post-recession trend, in which dividends per share for the S&P 500 grew at double-digit growth rates.

Over the next 12 months, dividend per share growth for the S&P 500 is expected to slow to 4.9%. This growth deceleration has been a consistent trend over the past year for the index. Analysts are projecting that seven out of the ten sectors will see slower DPS growth over the next 12 months.

The economic slowdown in the first half of 2016 has hit corporate America hard. Most companies can not afford to increase their dividends as they have done the last seven years. Falling dividends make a lot of sense because earnings have been falling for more than a year.

US Banks To Be Decapitated If Brexit

If you are looking for a black swan event that could plunge the weak US economy into a full-blown recession, Brexit could be it.

Big US banks have already taken brutal losses over the last year.

Bank of America has more than $2.1 trillion in assets. Bank of Amerca’s stock has plunged -20% from a year ago.

Citigroup has more than $1.8 trillion in assets. Its stock is down a shocking -23% over the last year.

Wells Fargo’s has more than $1.8 trillion in assets. Its stock has crashed more than -15% over the last 12 months.

Major banks in the U.S. are in trouble as a result of years worth of low-interest rates. The Federal Reserve has been trying its best to raise rates to prop up falling bank profits.

With so many U.S. banks on the edge of the precipice, a Brexit could push them over the edge.

Daboo7 talks about how Deutsche Bank was caught illegally manipulating the price of gold.

Officials: California Blackouts Up To 14 Days Coming

The California state power grid operator informed millions of Californians they could suffer power outages of up to 14 days this summer. Folks, that’s long enough to kill people. Imagine people who are on ventilators, CPAP machines, or just live in scorching hot areas.

California recently overtook France as the world’s 6th largest economy. A 14-day disruption of power in California would impact the entire U.S. economy.

With record-setting heat and air conditioning demand expected in Southern California, the state’s power grid operator issued an alert urging consumers to conserve energy to help prevent rotating power outages.

All customers, including homes, hospitals, oil refineries and airports are at risk of losing power this summer because a majority of electric generating stations in California use gas as their primary fuel.

How did we get to this point?

Aliso Canyon

On Oct. 23, 2015, a massive natural gas leak erupted at a storage well near Los Angeles. After attempts to plug the leak had been unsuccessful, SoCal Gas began building a relief well to capture the leaking gas.

“It was a mega-leak, one of the biggest ever recorded,” says Tim O’Connor, California Oil & Gas Director. EDF estimates that the amount of methane leaked had the same 20-year climate impact as burning nearly a billion gallons of gasoline.

Aerial infrared imaging shows methane leaking at a SoCal Gas storage facility. Methane is a potent greenhouse gas. Source: EDF.org

People started getting sick and were forced to leave their homes to escape the methane spewing from the gas leak in the Aliso Canyon Storage Facility.

The California Independent System Operator warns that power companies may not be able to keep up with periods of high consumer demand because the Aliso Canyon gas storage facility is closed. Aliso Canyon will not open until inspections are complete. State regulators will not allow SoCalGas to inject fuel into the plant until the company inspects all of its 114 wells.

Electricity demand is expected to rise during the unusual heatwave hitting California this week. Consumer demand for electricity is projected to top 45,000 megawatts, said the California Independent System Operator (ISO), which manages power flow through the state. That will put stress on the power grid.

Rotating Blackouts

California businesses and homes are likely going to see rotating blackouts. The ISO has imposed rotating outages in 2004, 2005, 2010 and 2015, mostly related to unexpected transmission line or power plant outages during periods of unusually high demand.

Aliso Canyon is the biggest of four SoCalGas storage fields. It provides service to the region’s 17 gas-fired power plants, hospitals, refineries, and other essential parts of California’s economy.

Unlike some other gas transmission systems that can store significant amounts of line pack gas in pipelines, like PG&E Corp in northern California, SoCalGas cannot function with only pipeline or storage supplies.

That makes storage fields much more critical for SoCalGas and the 21 million residents it supports.

Traders that short the market will no doubt be following this story closely. Should 14-day blackouts occur, any company with primary operations in southern California is a potential target.

Fed Bullard Makes Embarrassing Reversal, Says One Hike In 2.5 Years

The Federal Reserve is making a very public and very embarrassing reversal. The latest example is that of Fed hawk Bullard.

On March 27, 2016, Fed hawk Bullard (voter) said that April and June are “live meetings” for the Fed to raise rates. In a Nikkei interview, Bullard said, “The US economy is growing at a moderate pace. I think the labor markets are continuing to improve. I think unemployment will be below, or at, 4.5% at the end of this year, which will be a very good unemployment rate for the U.S. The median unemployment rate over the last 50 years is about 5.8%, so 4.5% is very low compared to that.”

Today Bullard said that the June meeting was not a good time to hike rates and that it is better for the Fed to hike rates following good news. Bullard said that only one more rate hike may be appropriate over the next 2.5 years. Bullard said that before hiking rates again, he wants economic uncertainties to resolve the mismatch between Fed words versus its actions which hurts its credibility.

Folks, these Fed clowns are not going to give us a good read on the economy. They have no idea what is going on from month to month. Hey, there’s nothing wrong with going to the Circus south of the border, but don’t drink the Kool-Aid. Bring your own drinks.

CommScope BTIG Initiates With Buy, Price Target $41

May 17, 2016: CommScope Holding Company has received Buy ratings from 3 analysts today. The 3 analysts are: George Notter of Jefferies, Greg Mesniaeff of Drexel Hamilton, and Mark…

June 17, 2016: BTIG initiates coverage of CommScope with a Buy rating, and sets a price target of $41.

More CommScope Holding News

June 15, 2016: CLSA initiates coverage of CommScope with a Buy rating, and sets a price target of $40.

May 17, 2016: CommScope Holding Company has received Buy ratings from 3 analysts today. The 3 analysts are: George Notter of Jefferies, Greg Mesniaeff of Drexel Hamilton, and Mark Delaney of Goldman Sachs. George Notter has a win ratio of 47% for an average gain of 10.2%. Greg Mesniaeff of Drexel Hamilton reiterates a Buy rating, and sets a price target of $38.

May 8, 2016: Goldman Sachs raised CommScope Holding Company to Buy from Neutral, and set a price target of $35. Goldman Sachs expects EPS to grow at a 12% CAGR from 2016-18 estimate, driven by integration of the TE BNS acquisition and debt reduction.

CommScope Holding Company, Inc. provides infrastructure solutions for communications networks worldwide.

CommScope published this video about their OneCell product:

CommScope published this video called Accelerating Gigabit Deployments by CommScope:

Beijing Says Apple iPhone Violates Its Patents LOL!

June 17, 2016: Reportedly Apple iPhones were found to have violated Chinese rival’s parent LOL. That’s rich folks. The king of patent rip-offs China, who allowed fake iPhones to be sold for years, is now accusing Apple of violating China patents. So much for big-cheese Tim Cook’s visit to China recently.

iPhone 6 and 6-plus models infringe on patent rights owned by Shenzhen Baili because of similarities to its 100c phone, the Beijing intellectual property office wrote in its decision.

Apple can appeal the ruling and could be allowed to continue selling its phones during the process.

Original source to Beijing intellectual property office filing (in Chinese): http://www.bjipo.gov.cn/zlzf/zfjggg/201605/P020160609372965002381.pdf

More Apple News

June 13, 2016: Apple Inc’s annual rate of iPhones sales said to decline for the first time in 2016. iPhone annual shipments to fall for first time since 2007 this year due to lukewarm demand for a new model with shipments seen between 210-220 million.

Reminder: At the beginning of the year, Nikkei reported that Apple could lower its production of iPhone 6 by more than expected in the Jan-Mar quarter. In mid-April, Nikkei reported Apple would sustain its lower rate of production in the April-June quarter. On May 11th, Nikkei reported that Taiwan tech suppliers expected significantly fewer orders from Apple in the second half of 2016.

May 22, 2016: Apple Inc rumored to have requested up to 78 million units of iPhone 7 production from suppliers according to the Taiwan press. This is the highest in 2 years.

Apple Inc Industry sources indicating that chip orders from Apple in Q2 have been disappointing on year over year basis according to a report in the DigiTimes. Report adding there is no sign of a substantial rise in chip orders in Q3 despite the expected launch of the new iPhone.

Apple CEO Cook has met with India PM Modi. The talks addressed cybersecurity and data encryption, along with Apple’s plans for possibilities of manufacturing in India. This was CEO Cook’s first trip to India.

May 16, 2016: Berkshire Hathaway discloses latest quarterly holdings; new stake in Apple of 9.8 million shares according to a new 13 F-HR filing. CNBC reports the Apple stake was not taken by Warren Buffet himself, but by one of his lieutenants.

May 12, 2016: Apple Inc to invest $1 billion in China’s Didi Chuxing (direct competitor of Uber). Didi Chuxing announced today important progress in its latest fundraising round. Among a group of prestigious Chinese and international institutions, Apple has invested USD$1 billion in DiDi, creating the single largest investment the Company has ever received. Through this investment, Apple becomes a strategic investor of DiDi, and joins Tencent, Alibaba and other key supporters to help further DiDi’s mission of building a data-driven rideshare platform to serve hundreds of millions of Chinese drivers and passengers. Building on its data mining and analysis capabilities, DiDi now completes over 11 million rides a day on its platform, serving close to 300 million users across over 400 Chinese cities with a diverse range of mobile technology-based transportation options. DiDi works with over 14 million Chinese car-owners and drivers, holding over 87% market share in private car-hailing and over 99% market share in taxi-hailing.

– Follow Up: Apple investment said to boost Didi fundraising to $3.0B – financial press

May 06, 2016: Apple CEO Tim Cook is planning a visit to China this month to meet with Senior Chinese government officials in Beijing. On April 26th Apple Q2 earnings had a -26% decline in Greater China (steepest drop among the five regions). Apple is expected to take its latest trademark dispute over the iPhone name to China’s Supreme Court. Currently Xintong is allowed to use iPhone mark on goods.

China is trying to copy popular products in the US by ripping off their trademarks and technology. This is why the story of China’s economic power is a joke. China is a copycat, a poser if you will and that means their economy is built on a deck of cards. Their communism form of government does not foster an environment that allows the people of China to be able to intellectually compete with people from the US. This is why I seldom, if ever, invest in China. China’s economy has gotten where it’s at today by intellectual property and technology theft. That, my friends, is a house of cards waiting to collapse.

CEO Tim Cook should tell China that if they don’t enforce international trademark and IP laws, Apple will no longer make iPhone parts in China which will put thousands of Chinese people out of work.

May 03, 2016: In an earnings conference call, Greenlight’s Einhorn says he continues to hold stake in Apple Inc. and sees great value in the Apple brand.

May 1, 2016: It’s a good time to take a position in Apple imo. With the earnings and revenue miss last week, the stock has overreacted to the downside.

Folks, Apple is a buy while there’s blood-in-the-streets play. Check out the recent carnage:

– Goldman Sachs removed Apple from its Conviction Buy list
– Carl Icahn dumped the stock
– Barclay’s cut its price target
– Morgan Stanley cut its price target
– Oppenheimer cuts Apple stock to a Perform rating, from Outperform
– Nomura cut its price target
– Drexel Hamilton cut its price target

What caused all this ruckus?

Last Tuesday, Aprill 26, 2016, Apple reported Q2 2016 EPS of $1.90 versus the $1.97 estimate. Revenue also missed coming in at $50.6 billion versus the $52.2 billion estimate. Apple also lowered its Q3 revenue guidance to $41 – $43 billion versus the previous guidance of $45.8 billion.

iPhone shipments came in at 51.2 million versus 61.2 million from the previous year. iPad shipments also fell, coming in at 10.3 million versus the 12.6 million from the previous year. Mac shipments fell to 4 million versus the 4.6 million from the previous year.

Not only do I think that traders overreacted to the earnings report, there are two catalysts in-play.

The first catalyst is Apple’s dividend payable on May 12, 2016 to shareholders of record as of the close of business on May 9, 2016. Why not capture that dividend if you can?

The second catalyst is the iPhone 7. Apple releases its new phone every year, in the second half of the year. Apple’s stock usually runs up in anticipation of the new release. We may have an opportunity to position early ahead of the seasonal new iPhone run up. There are also rumors that Apple will release more than one phone model this year which may help boost revenue.

Finally, as seen in the chart of Apple below, the stock is oversold and at horizontal support which could make for the last oversold RSI entry we will get before the seasonal iPhone 7 run-up. Just remember, don’t try and catch a falling knife. Look for a candle over candle entry.

Apple Inc. makes mobile communication and media devices, personal computers, and portable digital music players. The company also sells related software, services, accessories, networking solutions, and third-party digital content and applications.

It offers iPhone, a line of smartphones that comprise a phone, music player, and Internet device; iPad, a line of multi-purpose tablets; Mac, a line of desktop and portable personal computers; iPod, a line of portable digital music and media players, such as iPod touch, iPod nano, and iPod shuffle; and Apple Watches, personal electronic devices that combine watch technology with an iOS-based user interface.

The company also provides iTunes app and the iTunes Store; Mac App Store that allows customers to discover, download, and install Mac applications; iCloud, a cloud service; Apple Pay for making mobile payments; Apple TV, a portfolio of consumer and professional software applications; iOS and OS X operating systems software; iLife, a consumer-oriented digital lifestyle software application suite; iWork, an integrated productivity suite designed to help users create, present, and publish documents, presentations, and spreadsheets; and other application software, including Final Cut Pro, Logic Pro X, and its FileMaker Pro database software.

In addition, Apple offers various Apple-branded and third-party Mac-compatible and iOS-compatible accessories, including headphones, cases, displays, storage devices, and various other connectivity and computing products and supplies. The company sells and delivers digital content and applications through the iTunes Store, App Store, iBooks Store, and Mac App Store; and sells its products through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added resellers.